The Real Movement

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Tag: keynesian policies

Create Two, Three, Many SYRIZAs?

The programs of the Left are being threatened from an unexpected direction

openbordersOver the weekend I spent some time  taking a deep dive into the programs of some of the radical parties on the Left and I have a big question: How do you have open borders, on the one hand; and many of the programs supported by the Left, on the other hand?

The Socialist Equality Party argues:

“The SEP fights for the repeal of all anti-immigrant laws and the disbanding of Immigration and Customs Enforcement (ICE) and the US Border Patrol. It calls for all undocumented workers to be guaranteed full legal rights, including the right to work and the right to travel to their home countries without the threat of being barred from returning and torn from their families. Against the attempt to militarize borders and persecute immigrants, not only in the US but all over the globe, the working class must uphold the principle of open borders—the right of workers to live and work in whatever country they choose with full citizenship rights.”

So far, so good, right?

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Why Thatcher’s neoliberalism was the continuation of Keynesianism

I received this question on my page:

“I’ve noticed that you hold a quite controversial position regarding Thatcher, when you say she was right. Do you mean that you endorse her policies? Wouldn’t it be insane for communists endorsing or proposing extreme Thatcherite policies? If not, would you mind explaining it a little better please?”

Not a problem, let me give some context for why in a certain sense, I argue Thatcher was correct about TINA:

In 1980, Margaret Thatcher argued “There is no alternative” to the policies she was pursuing. In the 36 years since she made her TINA speech, those words have been repeated on the Left as a declaration of class war. While the Left has been rightly outraged by her speech, assuming, as it does, that her neoliberal policies were a historical necessity, little or no context for her words have ever been provided by her Left opponents.

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Keynes and the myth of the Reagan administration’s neoliberalism

Robert Skildelsky, biographer of John Keynes, has written an essay written an essay on the 80 year legacy of the General Theory in which he credits Keynes with inventing macroeconomic policy and for showing how government could employ means at its disposal to offset economic depressions.

For all the genius of Keynes’ General Theory, its importance has not always been acknowledged by mainstream economics. By the 1980s, according to Skidelsky, most of mainstream economics came to reject many of the ideas first proposed by Keynes, particularly his argument capitalist economies were inherently prone to chronic underutilization of both capital and labor.

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Why Marxist can’t explain the collapse of Keynesian economic policies

Part Three

“Instead of understanding so-called ‘labour values’ as ontologically prior to money prices, the position adopted here is that order and regularity in the inter-relations of units of capitalist production is possible only because there is a form of value, namely money, as a precondition for it. Only once this form of commensurating products obtains is there any meaning to the supposition of a law of value rooted in labour time and appearing as price. The money-form structures such determinations as socially necessary labour time, deciding to what degree actual labour times are socially validated, or replaced by socially imputed amounts of labour.” –Chris Arthur, Value and Money

The collapse of Keynesian state management of the economy has never been explained by Marxists. Instead we have witnessed one Marxist scholar after another suggesting a return to Keynesian policies is both possible and necessary. In this part of the series, I will show why Keynesian policies ultimately collapsed. And, moreover, all talk of a return to the so-called Keynesian social state is a fantasy.

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Why Marxists can’t explain how Keynesian policies work

(And they can’t explain why Keynesianism collapsed either)

Part Two

This is part two of the series, “How fiat currency killed Marxism”. Part one is here.

YoungstownPlantAt the high level of abstraction of Capital, money has to be a commodity, because Capital presents a theory of a “pure” capitalist economy, without state intervention. And in the 19th century laissez-faire capitalism (without state intervention) that Marx was analyzing, money was a commodity and money had to be a commodity in its functions of measure of value and store of value. However, in the post-1973 contemporary capitalism, money is no longer a commodity (i.e. is no longer convertible into gold at a fixed exchange rate), and money does not have to be a commodity in Marx’s theory. The state-guaranteed fiat money serves the same purpose as gold under the gold standard – it provides an observable, homogeneous, quantitative, and socially valid expression of abstract labor.  —Fred Moseley, Money has no price

If Keynesian currency devaluation allows the state to maintain production for profit by reducing the real value of wages, why were Keynesian policies abandoned in the late 1970s for neoliberalism? To explain why this happened, requires some discussion of the problem with simple Keynesian “full employment” policies.

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Even 80 years later the Left has learned nothing: A reply to Rschard1

I received a very welcome and interesting comment on my blog post, “Deficit reduction is not austerity; it kills capitalism”, from Rschard1. The commenter argues that my own argument is technically correct but ignores the messiness of historical contingency. I am, the commenter states,

“glossing over the uncomfortable truth that recessions caused by voluntary deflation have, without any exception I know of, led to horrid consequences for the working class.”

“Der Kampf gegen die Arbeitslosigkeit”

As support for his/her view, the commenter presents the classical case of fascist full employment policies of the German Nazi party. While the German Marxists followed what the commenter argues is essentially my solution for the Great Depression, the fascist introduced a series of measures to create jobs by rearming Germany and preparing it for World War II. These policies rapidly brought Germany to full employment, just as Keynes predicted they could and aided the fascist rise to power. Austerity, as the commenter argues, is great for the more advanced countries, but terrible for countries like Greece.

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“There is no alternative” (for Marxists): Costas Lapavitsas Edition

“There is no alternative”, is the famous aphorism coined by Margaret Thatcher in reply to her critics. According to the Wikipedia, TINA means, “economic liberalism is the only valid remaining ideology.” Economic liberalism is generally taken to mean dismantling of the social welfare state that emerged after World War II and collapsed into disarray beginning with the 1970s depression. However, in a recent interview, Costas Lapavitsas essentially argued that, for Marxists another sort of TINA TINAreigns: Because of a lack of policy tools drawn on labor theory, Marxists had on alternative but to make use of the very same Keynesian policy tools that produced the rampant stagflation of the 1970s depression. In this post, I take exception with Lapavitsas’ argument.

My argument is not only that Marxists have no need to rely on Keynesian policy tools for their short-run program, Keynesian policy tools have the same aim of Margaret Thatcher’s neoliberal policy tools and run counter to the aim of communism. Instead, Marxist should drawn directly on labor theory to produce a set of immediate demands. Labor theory, according to my reading, argues Marxists should not seek to “exit” the crisis of capitalism, but should take as their starting point the limits imposed by production for profit on the production of material wealth. Our immediate program should be to push the production of material wealth beyond the limits imposed on it by production for profit.

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Costas Lapavitsas and the growing desperation of the underconsumptionist school

In an interview with Jacobin, “Greece: Phase Two”, Costas Lapavitsas defends Yanis Varoufakis and, in the course of this defense, highlights the forces behind the increasing desperation of the Marxist underconsumptionist school:

“Let me come clean on this. Keynes and Keynesianism, unfortunately, remain the most powerful tools we’ve got, even as Marxists, for dealing with issues of policy in the here and now. The Marxist tradition is very powerful in dealing with the medium-term and longer-term questions and understanding the class dimensions and social dimensions of economics and society in general, of course. There’s no comparison in these realms.

But, for dealing with policy in the here and now, unfortunately, Keynes and Keynesianism remain a very important set of ideas, concepts, and tools even for Marxists. That’s the reality. Whether some people like to use the ideas and not acknowledge them as Keynesian is something I don’t want to comment upon, but it happens.

So I cannot blame Varoufakis for that, for associating himself with Keynesians, because I’ve also associated myself with Keynesians, openly and explicitly so. If you showed me another way of doing things, I’d be delighted. But I can assure you, after many decades of working on Marxist economic theory, that there isn’t at the moment. So yes, Varoufakis has worked with Keynesians. But that isn’t really, in and of itself, a damning thing.”

maxresdefaultI guess I am not so much speechless that Lapavitsas said this as I am speechless that it is completely true. After 150 years, Marxists still have no other policy tools in their book bags except Keynesian ones; Marxist economists have yet to give birth to their own policy tools derived organically from the premises of labor theory of value.

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Grexit is not a fix for low wages and low labor productivity in Greece

I came across this post on the Lenin’s Tomb blog today. See if you can tell why I am tearing out my hair.

Syriza’s mauling at the EU negotiations:

“Syriza has been defeated in the first round of negotiations.

After a period of enjoyable defiance, during which they won the backing of the overwhelming majority of the Greek people – 80% according to a poll taken before the latest deal, published in today’s Avgi – they have come back with small change.  Pushed to the point where they were at risk of a collapse of the banking system, and unprepared for a Grexit (and thus unable to use it as a bargaining chip), they accepted the most comprehensive drubbing.”

Yes, Grexit — a ridiculous term meant only to show how revolutionary one is. I cannot understand how people see Grexit as a bargaining chip or a threat to use in negotiations. I really don’t get that.

The only people who think Grexit is150105_Open_Europe_Blog_Greece_exit a good idea also think the problem in a crisis is that currency is over-valued. From that point of view — of Krugman and Keynesians generally — the euro as a currency is over-valued in terms of the productivity of labor in Greece.

The solution of these people is to exit from the euro, replace it with a currency the Greece government controls and allow that new currency to depreciate against the euro. If this neo-Drachma were allowed to depreciate in purchasing power by 50%, they argue, Greece goods would become relatively cheaper exports would rise, while imports from the euro-zone would fall as goods produced in the rump eurozone became increasingly expensive in drachma-terms. The net result is the expansion of the export sector at the expense of imports.

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Pushing On A String? – The logic of state management of capitalism

“‘Pushing on a string’ is particularly used to illustrate limitations of monetary policy, particularly that the money multiplier is an inequality, a limit on money creation, not an equality.” –Wikipedia

So here are the questions I have been contemplating for the past week or so: When simpleton economists suggest policies to manage “the economy”, what in their view do they think is being managed? How do they Yellen-Summers-picconceptualize both the “economy” itself and the tools they employ to manage it? What, if any, are the vulnerabilities (defects) of this form of management that is being expressed in the current debate among mainstream (neoclassical) economists? In particular, what are the choices being expressed in the debate over who should replace Bernanke as chair of the Federal Reserve Bank?

To be sure, I am not trying to offer a polemic against mainstream economics in this essay but to understand this policy in its own right, as well as to restate it in a form that is comprehensible within a labor theory framework as i understand that framework.

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